Audi will roll out big SUV to challenge Mercedes, BMW

Christoph Rauwald
Bloomberg News

Audi plans to roll out a new full-sized sport-utility vehicle that will challenge the $63,600 Mercedes- Benz GL for buyers of spacious luxury crossovers.

The top-of-the-line SUV is due to hit the streets before the end of the decade, Audi Chief Executive Officer Rupert Stadler said in an interview. The German brand expects the model to boost sales in markets such as the U.S. and China in its bid to become the world’s best-selling maker of luxury cars.

The Volkswagen AG unit is “working heavily on this project,” said Stadler, who last week at the Detroit auto show unveiled a revamped version of the mid-sized Q7, which is currently the brand’s flagship SUV. A bigger model, dubbed the Q8, “would strengthen the brand. I’m convinced we need the car by 2020.”

The new model would be part of Audi’s plans to spend 24 billion euros ($27.8 billion) on technology and production in the next five years. Most of the money will go to increase its lineup to 60 cars from 50. That includes the subcompact Q1 crossover in 2016, which will bring Audi’s SUV lineup to at least four. Audi’s goal is to dethrone BMW AG as the world’s largest premium-car maker by 2020, in a three-way race that also includes Mercedes.

BMW’s lead over Audi narrowed to 70,619 in 2014 from 79,658 a year ago. Mercedes remained third, trailing by about 160,000 vehicles, but had the fastest growth rate among the three with an increase of 13 percent.

An expanded SUV offering could help Audi gain ground in the U.S., where it only sells about half as many cars as its two German competitors. Even so, Audi will face even more competition by the time the new upscale SUV hits showrooms. BMW announced plans last year to add its own full-sized SUV, the X7, which could beat Audi’s Q8 to showrooms.

Meanwhile, Bentley, also a Volkswagen unit, will present the Bentayga later this year, which the British marque boasts will be the world’s most luxurious and expensive SUV. Maserati is finalizing the Levante, and Jaguar will start selling its first crossover, the mid-sized F-PACE, in 2016.

Despite more models vying for buyers, Audi is upbeat on its prospects in the U.S., where SUVs have continued to gain in popularity and there’s space for luxury brands to grow. In the coming years, high-end autos could account for as much as 13 percent of the U.S. market, up from about 10 percent now, Stadler said. And after outselling its rivals in other major markets, the brand believes it can repeat that feat in the U.S.

“We did it in China, we did in Europe. Why shouldn’t it happen in the U.S. at some point?” Stadler said.